§33-4-15a. Credit for reinsurance; definitions; requirements;
trust accounts; reductions from liability;
security; effective date.
(a) For purposes of this section, an "accredited reinsurer" is
one which:

(1) Has filed an application for accreditation and received a
letter of accreditation from the commissioner;

(2) Is licensed to transact insurance or reinsurance in at
least one of the fifty states of the United States or the District
of Columbia or, in the case of a United States branch of an alien
assuming insurer, is entered through and licensed to transact
insurance or reinsurance in at least one of the fifty states of the
United States or the District of Columbia;

(3) Has filed with the application a certified statement that
the company submits to this state's jurisdiction and that the
company will comply with the laws and rules of the state of West
Virginia;

(4) Has filed with the application a certified statement that
the company submits to the examination authority granted the
commissioner by section nine, article two of this chapter and will
pay all examination costs and fees as required by that section, and
the one-time assessment on insurers imposed under section nine-a,
article two of this chapter;

(5) Has filed with the application a copy of its most recent
annual statement in a form consistent with the requirements of subdivision (8) of this subsection and a copy of its last audited
financial statement;

(6) Has filed any other information the commissioner requests
to determine that the company qualifies for accreditation under
this section;

(7) Has remitted the applicable processing fee with its
application for accreditation;

(8) Files with the commissioner after initial accreditation on
or before the first day of March of each year a true statement of
its financial condition, transactions and affairs as of the
preceding thirty-first day of December. The statement shall be on
the appropriate national association of insurance commissioners
annual statement blank; shall be prepared in accordance with the
national association of insurance commissioners annual statement
instructions; and shall follow the accounting practices and
procedures prescribed by the national association of insurance
commissioners accounting practices and procedures manual as
amended. The statement shall be accompanied by the applicable
annual statement filing fee. The commissioner may grant extensions
of time for filing of this annual statement upon application by the
accredited reinsurer; and

(9) Files with the commissioner after initial accreditation by
the first day of June of each year a copy of its audited financial
statement for the period ending the preceding thirty-first day of
December.

(b) If the commissioner determines that the assuming insurer
has failed to continue to meet any of these qualifications, he or
she may upon written notice and hearing, as prescribed by section
thirteen, article two of this chapter, revoke an assuming insurer's
accreditation. Credit shall not be allowed to a ceding insurer if
the assuming insurer's accreditation has been revoked by the
commissioner after notice and hearing.

(c) Credit for reinsurance shall be allowed a domestic ceding
insurer or any foreign or alien insurer transacting insurance in
West Virginia that is domiciled in a jurisdiction that employs
standards regarding credit for reinsurance that are not
substantially similar to those applicable under this article as
either an asset or a deduction from liability on account of
reinsurance ceded only when the reinsurer meets one of the
following requirements:

(1) Credit shall be allowed when the reinsurance is ceded to
an assuming insurer which is licensed to transact insurance or
reinsurance in this state.

(2) Credit shall be allowed when the reinsurance is ceded to
an assuming insurer which is accredited as a reinsurer in this
state prior to the effective date of the reinsurance contract.

(3) Credit shall be allowed when the reinsurance is ceded to
an assuming insurer which is domiciled and licensed in, or in the
case of a United States branch of an alien assuming insurer, is
entered through one of the fifty states of the United States or the District of Columbia and which employs standards regarding credit
for reinsurance substantially similar to those applicable under
this statute, and the ceding insurer provides evidence suitable to
the commissioner that the assuming insurer:

(A) Maintains a surplus as regards policyholders in an amount
not less than twenty million dollars: Provided, That the
requirements of this paragraph do not apply to reinsurance ceded
and assumed pursuant to pooling arrangements among insurers in the
same holding company system;

(B) The ceding insurer provides the commissioner with a
certified statement from the assuming insurer that the assuming
insurer submits to the authority of this state to examine its books
and records granted the commissioner by section nine, article two
of this chapter and will pay all examination costs and fees as
required by that section; and

(C) The reinsurer complies with the provisions of subdivision
(6), subsection (c) herein.

(4) Credit shall be allowed when the reinsurance is ceded to
an assuming insurer which maintains a trust fund as required by
subsection (d) herein in a qualified United States financial
institution, as defined by this section, for the payment of the
valid claims of its United States policyholders and ceding
insurers, their assigns and successors in interest, and complies
with the provisions of subdivision (6) herein.

(5) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of subdivisions
(1) through (4), inclusive, subsection (c) of this section, but
only with respect to the insurance of risks located in
jurisdictions where such reinsurance is required by applicable law
or regulation of that jurisdiction.

(6) If the assuming insurer is not licensed or accredited to
transact insurance or reinsurance in this state, the credit
permitted by subdivisions (3) and (4) of this subsection shall not
be allowed unless the assuming insurer agrees in the reinsurance
agreements:

(A) That in the event of the failure of the assuming insurer
to perform its obligations under the terms of the reinsurance
agreement, the assuming insurer, at the request of the ceding
insurer, shall submit to the jurisdiction of any court of competent
jurisdiction in any state of the United States, shall comply with
all requirements necessary to give such court jurisdiction and
shall abide by the final decision of such court or of any appellate
court in the event of an appeal; and

(B) To designate the secretary of state as its true and lawful
attorney upon whom may be served any lawful process in any action,
suit or proceeding instituted by or on behalf of the ceding
company. Process shall be served upon the secretary of state, or
accepted by him or her, in the same manner as provided for service
of process upon unlicensed insurers under section thirteen of this
article: Provided, That this provision is not intended to conflict with or override the obligation of the parties to a reinsurance
agreement to arbitrate their disputes, if such an obligation is
created in the agreement.

(d) Whenever an assuming insurer establishes a trust fund for
the payment of claims pursuant to the provisions of this section,
the following requirements shall apply:

(1) The assuming insurer shall report annually to the
commissioner information substantially the same as that required to
be reported on the national association of insurance commissioners
annual statement form by licensed insurers to enable the
commissioner to determine the sufficiency of the trust fund. In
the case of a single assuming insurer, the trust shall consist of
a trusteed account representing the assuming insurer's liabilities
attributable to business written in the United States and, in
addition, the assuming insurer shall maintain a trusteed surplus of
not less than twenty million dollars. In the case of a group,
including incorporated and individual unincorporated underwriters,
the trust shall consist of a trusteed account representing the
group's liabilities attributable to business written in the United
States and, in addition, the group shall maintain a trusteed
surplus of which one hundred million dollars shall be held jointly
for the benefit of United States ceding insurers of any member of
the group. The incorporated members of the group shall not be
engaged in any business other than underwriting as a member of the
group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the
unincorporated members. The group shall make available to the
commissioner an annual certification of the solvency of each
underwriter by the group's domiciliary regulator and its
independent public accountants.

(2) In the case of a group of incorporated insurers under
common administration which complies with the filing requirements
contained in the previous paragraph; which has continuously
transacted an insurance business outside the United States for at
least three years immediately prior to making application for
accreditation; which submits to this state's authority to examine
its books and records and bears the expense of the examination; and
which has aggregate policyholders' surplus of ten billion dollars,
the trust shall be in an amount equal to the group's several
liabilities attributable to business ceded by United States ceding
insurers to any member of the group pursuant to reinsurance
contracts issued in the name of the group. The group shall also
maintain a joint trusteed surplus of which one hundred million
dollars shall be held jointly for the benefit of United States
ceding insurers of any member of the group as additional security
for any such liabilities. Each member of the group shall make
available to the commissioner an annual certification of the
member's solvency by the member's domiciliary regulator and its
independent public accountants.

(3) Any trust that is subject to the provisions of this section shall be established in a form approved by the
commissioner. The trust instrument shall provide that contested
claims shall be valid and enforceable upon the final order of any
court of competent jurisdiction in the United States. The trust
shall vest legal title to its assets in the trustees of the trust
for its United States policyholders and ceding insurers, their
assigns and successors in interest. The trust and the assuming
insurer shall be subject to examination as determined by the
commissioner. The trust described herein shall remain in effect
for as long as the assuming insurer shall have outstanding
obligations due under the reinsurance agreements subject to the
trust.

(4) No later than the twenty-eighth day of February of each
year the trustees of the trust shall report to the commissioner in
writing setting forth the balance of the trust and listing the
trust's investments at the preceding year's end. The trustees
shall certify the date of termination of the trust, if so planned,
or certify that the trust shall not expire prior to the next
following December thirty-first.

(e) A reduction from liability for the reinsurance ceded by a
ceding insurer subject to the requirements of this article to an
assuming insurer not meeting the requirements of subsection (c) of
this section shall be allowed in an amount not exceeding the
liabilities carried by the ceding insurer. The reduction shall be
in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the ceding insurer, under a
reinsurance contract with the assuming insurer as security for the
payment of obligations thereunder: Provided, That the security is
held in the United States subject to withdrawal solely by, and
under the exclusive control of, the ceding insurer; or, in the case
of a trust, held in a qualified United States financial
institution, as defined by this section. The security may be in
the form of:

(1) Cash;

(2) Securities listed by the securities valuation office of
the national association of insurance commissioners and qualifying
as admitted assets; or

(3) Clean, irrevocable, unconditional letters of credit,
issued or confirmed by a qualified United States financial
institution, as defined by this section, no later than the
thirty-first day of December of the year for which filing is being
made, and in the possession of the ceding company on or before the
filing date of its annual statement: Provided, That letters of
credit meeting applicable standards of issuer acceptability as of
the dates of their issuance or confirmation shall, notwithstanding
the issuing or confirming institution's subsequent failure to meet
applicable standards of issuer acceptability, continue to be
acceptable as security until their expiration, extension, renewal,
modification or amendment, whichever first occurs.

(f) For purposes of this section, a "qualified United States financial institution" means an institution that:

(1) Is organized or licensed under the laws of the United
States or any state thereof;

(2) Is regulated, supervised and examined by United States
federal or state authorities having regulatory authority over banks
and trust companies; and

(3) Has been determined by either the commissioner, or the
securities valuation office of the national association of
insurance commissioners, to meet the standards of financial
condition and standing as are considered necessary and appropriate
to regulate the quality of financial institutions whose letters of
credit will be acceptable to the commissioner.

(g) A "qualified United States financial institution" means,
for purposes of those provisions of this law specifying those
institutions that are eligible to act as a fiduciary of a trust, an
institution that:

(1) Is organized or, in the case of a United States branch or
agency office of a foreign banking organization, licensed under the
laws of the United States or any state thereof and has been granted
authority to operate with fiduciary powers; and

(2) Is regulated, supervised and examined by federal or state
authorities having regulatory authority over banks and trust
companies.

(h) The provisions of this section shall apply to all cessions
on or after the first day of January, one thousand nine hundred ninety-three.